InvestorQ : Has the trade deficit reduced for the month of February 2021?
Lavanya Subramanian made post

Has the trade deficit reduced for the month of February 2021?

Anamika Sodhani answered.
1 year ago

The government in the last few months has started announcing the first cut on trade data by the second day of the next month instead of waiting all the way till the middle of the month to get the first cut on trade data. Of course, this is only the merchandise trade data and does not include the services data which is announced by the Reserve Bank of India only around the middle of the month with a time lag of one month.

Preliminary trade data put on 02 March suggests a minor 0.25% fall in merchandise exports for the month of February 2021. However, the trade gap for Feb-21 has sharply narrowed to just about $12.88 billion compared to an average level of $15 billion trade deficit in the last 2 months of December 2020 and January 2021. To that extent, the figure is less of a pressure on the current account deficit.

Exporters of goods have attributed this fall in exports to container shortages and supply disruptions due to rising COVID-19 cases. Container shortages have come about across the world because China is paying a hefty premium just to get back their empty containers and hence Indian exporters are finding it hard to compete with that kind of government largesse. This has led to exports marginally lower by 0.25% at $27.40 billion for Feb-21.

Imports for the month of Feb-21 stood at $40.55 billion. Pharma exports clocked a yoy growth of 14.6% but major forex earners like petroleum, gems & jewellery and engineering goods saw negative growth. Gold imports were up 124% on a yoy basis. For 11 months of FY21, exports were 12.32% lower at $255.92 billion while imports fell by a much sharper 23.09% to $340.88 billion. India could end the fiscal year with overall CAD of $5 billion.